Hollywood studios to face antitrust accusers

Large Hollywood movie studios will descend on Brussels Monday to fight accusations their pay-TV contracts in Britain violated competition laws for the European Union.

A cavalcade of executives, lawyers, lobbyists and economists will face off against the top brass from the European Commission’s antitrust department in a three-day hearing.

“European consumers want to watch the pay-TV channels of their choice regardless of where they live or travel in the EU,” Margrethe Vestager, the European commissioner for competition, said when she announced the charges in July.

In a sign of the breadth and depth of the issues at stake, about 150 people are expected to show up, including Keith Le Goy, president of international distribution at Sony Pictures Television, who will speak Wednesday. Defendants will make presentations on the “legal and economic context” and the potential “harm to diversity, to innovation, to competition and to consumers,” according to a copy of the agenda obtained by POLITICO.

The Commission is focused on how movie studios and broadcasters enforce the system of country-by-country licensing. The case could overlap with parts of the Commission’s wider strategy to overhaul century-old copyright practices.

The film and music industries have long argued territorial licensing — or country-by-country licensing — underpins the creative ecosystem and better reflects Europe’s diversity.

“The impact of the Commission’s analysis is destructive of consumer value and we will oppose the proposed action vigorously,” Disney said in a statement in response to the charges. One studio adviser equated the push to “social engineering.”

Yet the Commission insists it does not want to undermine territorial licensing. Antitrust officials said that while studios and broadcasters are free to decide where they market and sell their work, they cannot refuse customers simply because they reside in another EU country.

Discriminating against people on the basis of nationality or residence runs counter to the basic tenets of a European single market. The Commission said some contracts also contain clauses requiring movie studios to prevent other broadcasters from screening films in the U.K. for which Sky owns the copyright.

Movie studios argue the Commission is speeding down a dead-end street. They point out that national copyright laws prevent a broadcaster from screening a film in a member country where another broadcaster owns the rights. The clauses merely reflect that and rewriting the contracts would not change anything, they argue.

The case has drawn a large number of outside parties. As many as 11 will speak at the hearing, including Canal+, ProSieben and SPAIN’S DTS.

Advisers say BEUC, a European consumers organisation, is the only supporter of the Commission’s case.